Thursday, January 16, 2014

Rule against double compensation in govt service.

Petitioner argues that Sections 11,[27] 48,[28] and 52[29] of the EPIRA are unconstitutional for violating Section 13, Article VII of the 1987 Constitution.

Section 13, Article VII of the 1987 Constitution provides:

Sec. 13. The President, Vice-President, the Members of the Cabinet, and their deputies or assistants shall not, unless otherwise provided in this Constitution, hold any other office or employment during their tenure. They shall not, during said tenure, directly or indirectly practice any other profession, participate in any business, or be financially interested in any contract with, or in any franchise, or special privilege granted by the Government or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries. They shall strictly avoid conflict of interest in the conduct of their office.

In Civil Liberties Union v. Executive Secretary,[31] this Court explained that the prohibition contained in Section 13, Article VII of the 1987 Constitution does not apply to posts occupied by the Executive officials specified therein without additional compensation in an ex-officio capacity as provided by law and as required by the primary function of said official's office, to wit:

The prohibition against holding dual or multiple offices or employment under Section 13, Article VII of the Constitution must not, however, be construed as applying to posts occupied by the Executive officials specified therein without additional compensation in an ex-officio capacity as provided by law and as required by the primary functions of said officials' office. The reason is that these posts do not comprise "any other office" within the contemplation of the constitutional prohibition but are properly an imposition of additional duties and functions on said officials. To characterize these posts otherwise would lead to absurd consequences, among which are: The President of the Philippinescannot chair the National Security Council reorganized under Executive Order No. 115 (December 24, 1986). Neither can the Vice-President, the Executive Secretary, and the Secretaries of National Defence, Justice, Labor and Employment and Local Government sit in this Council, which would then have no reason to exist for lack of a chairperson and members. The respective undersecretaries and assistant secretaries, would also be prohibited.

x x x x

The term "primary" used to describe "functions" refers to the order of importance and thus means chief or principal function. The term is not restricted to the singular but may refer to the plural. The additional duties must not only be closely related to, but must be required by the official's primary functions. Examples of designations to positions by virtue of one's primary functions are the Secretaries of Finance and Budget, sitting as members of the Monetary Board, and the Secretary of Transportation and Communications, acting as Chairman of the Maritime Industry Authority and the Civil Aeronautics Board.[32]

The designation of the members of the Cabinet to form the NPB does not violate the prohibition contained in our Constitution as the privatization and restructuring of the electric power industry involves the close coordination and policy determination of various government agencies. Section 2 of the EPIRA clearly shows that the policy toward privatization would involve financial, budgetary and environmental concerns as well as coordination with local government units, to wit:

SECTION 2. Declaration of Policy. – It is hereby declared the policy of the State:

(a) To ensure and accelerate the total electrification of the country;

(b) To ensure the quality, reliability, security and affordability of the supply of electric power;

(c) To ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market;

(d) To enhance the inflow of private capital and broaden the ownership base of the power generation, transmission and distribution sectors;

(e) To ensure fair and non-discriminatory treatment of public and private sector entities

in the process of restructuring the electric power industry;

(f) To protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power;

(h) To promote the utilization of indigenous and new and renewable energy resources in power generation in order to reduce dependence on imported energy;

(i) To provide for an orderly and transparent privatization of the assets and liabilities of the National Power Corporation (NPC);

(j) To establish a strong and purely independent regulatory body and system to ensure consumer protection and enhance the competitive operation of the electricity market; and

(k) To encourage the efficient use of energy and other modalities of demand side management.

As can be gleaned from the foregoing enumeration, the restructuring of the electric power industry inherently involves the participation of various government agencies. In Civil Liberties, this Court explained that mandating additional duties and functions to Cabinet members which are not inconsistent with those already prescribed by their offices or appointments by virtue of their special knowledge, expertise and skill in their respective executive offices, is a practice long-recognized in many jurisdictions. It is a practice justified by the demands of efficiency, policy direction, continuity and coordination among the different offices in the Executive Branch in the discharge of its multifarious tasks of executing and implementing laws affecting national interest and general welfare and delivering basic services to the people.[33]

The production and supply of energy is undoubtedly one of national interest and is a basic commodity expected by the people. This Court, therefore, finds the designation of the respective members of the Cabinet, as ex-officiomembers of the NPB, valid.

This Court is not unmindful, however, that Section 48 of the EPIRA is not categorical in proclaiming that the concerned Cabinet secretaries compose the NPB Board only in an ex-officio capacity. It is only in Section 52 creating the Power Sector Assets and Liabilities Management Corporation (PSALM) that they are so designated in an ex-officiocapacity. Sections 4 and 6 of the EPIRA provides:

Section 4. TRANSCO Board of Directors.

All the powers of the TRANSCO shall be vested in and exercised by a Board of Directors. The Board shall be composed of a Chairman and six (6) members. The Secretary of the DOF shall be the ex-officio Chairman of the Board. The other members of the TRANSCO Board shall include the Secretary of the DOE, the Secretary of the DENR, the President of TRANSCO, and three (3) members to be appointed by the President of the Philippines, each representingLuzon, Visayas and Mindanao, one of whom shall be the President of PSALM.

x x x x.

Section 6. PSALM Board of Directors.

PSALM shall be administered, and its powers and functions exercised, by a Board of Directors which shall be composed of the Secretary of the DOF as the Chairman, and the Secretary of the DOE, the Secretary of the DBM, the Director-General of the NEDA, the Secretary of the DOJ, the Secretary of the DTI and the President of the PSALM as ex-officio members thereof.

Nonetheless, this Court agrees with the contention of the Solicitor General that the constitutional prohibition was not violated, considering that the concerned Cabinet secretaries were merely imposed additional duties and their posts in the NPB do not constitute “any other office” within the contemplation of the constitutional prohibition.

The delegation of the said official to the respective Board of Directors were designation by Congress of additional functions and duties to the officials concerned, i.e., they were designated as members of the Board of Directors. Designation connotes an imposition of additional duties, usually by law, upon a person already in the public service by virtue of an earlier appointment.[34] Designation does not entail payment of additional benefits or grant upon the person so designated the right to claim the salary attached to the position.Without an appointment, a designation does not entitle the officer to receive the salary of the position. The legal basis of an employee's right to claim the salary attached thereto is a duly issued and approved appointment to the position, and not a mere designation.[35]

Hence, Congress specifically intended that the position of member of the Board of NPB shall be ex-officio or automatically attached to the respective offices of the memberscomposing the board. It is clear from the wordings of the law that it was the intention of Congress that the subject posts will be adjunct to the respective offices of the official designated to such posts.

The foregoing discussion, notwithstanding, the concerned officials should not receive any additional compensation pursuant to their designation as ruled in Civil Liberties, thus:

The ex-officio position being actually and in legal contemplation part of the principal office, it follows that the official concerned has no right to receive additional compensation for his services in the said position. The reason is that these services are already paid for and covered by the compensation attached to his principal office. It should be obvious that if, say, the Secretary of Finance attends a meeting of the Monetary Board as an ex-officio member thereof, he is actually and in legal contemplation performing the primary function of his principal office in defining policy in monetary and banking matters, which come under the jurisdiction of his department. For such attendance, therefore, he is not entitled to collect any extra compensation, whether it be in the form of a per diem or an honorarium or an allowance, or some other such euphemism. By whatever name it is designated, such additional compensation is prohibited by the Constitution.

In relation thereto, Section 14 of the EPIRA provides:

SEC. 14. Board Per Diems and Allowances. – The members of the Board shall receive per diem for each regular or special meeting of the board actually attended by them and, upon approval of the Secretary of the Department of Finance, such other allowances as the Board may prescribe.

Section 14 relates to Section 11 which sets the composition of the TRANSCO Board naming the Secretary of the Department of Finance as the ex officio Chairman of the Board. The other members of the TRANSCO Board include the Secretary of the Department of Energy and the Secretary of the Department of Environment and Natural Resources. However, considering the constitutional prohibition, it is clear that such emoluments or additional compensation to be received by the members of the NPB do not apply and should not be received by those covered by the constitutional prohibition, i.e., the Cabinet secretaries. It is to be noted that three of the members of the NPB are to be appointed by the President, who would be representing the interests of those in Luzon, Visayas, and Mindanao, who may be entitled to such honorarium or allowance if they do not fall within the constitutional prohibition.

Hence, the said cabinet officials cannot receive any form of additional compensation by way of per diems and allowances. Moreover, any amount received by them in their capacity as members of the Board of Directors should be reimbursed to the government, since they are prohibited from collecting additional compensation by the Constitution.

These interpretations are consistent with the fundamental rule of statutory construction that a statute is to be read in a manner that would breathe life into it, rather than defeat it,[36]and is supported by the criteria in cases of this nature that all reasonable doubts should be resolved in favor of the constitutionality of a statute.[37]